Is equity a safe bet as a long-term investment? | Canada News Media
Connect with us

Investment

Is equity a safe bet as a long-term investment?

Published

 on

Equity is an asset class which is well-known for its volatile nature and has been embraced and feared the most by investors. More often than not, investors enter into equity market with the mind-set of making substantial returns in a short time. Given that equity has high volatility over short holding periods, it leaves investors believing that equity is a risky investment.

However, the right approach would be to embrace equity for a longer time period, and you will see that equity is not a risky investment. This can be best explained by looking at the data for around 26 equity mutual funds which have stood the test of time and have been there for 25 years or longer. UTI Mastershare Fund, launched in 1986, is the oldest one and has delivered an average 10-year rolling return (with daily shift) of 12.5% per annum (p.a.) between 1997 and 2022. A 10-year rolling return average shows how an investment in the fund would have fared.

Now, let us take the case of a person investing equally in all the 26 funds in 1997 and holding them for a period of 10 years. The average would have been a return of 16.8% p.a. between 1997 and 2022. The worst-case return for a 10-year period for a person who had invested equally in all 26 funds would have been 9.5% p.a.— a return more than what an investor would have made from fixed deposits.

Now, let us dwell deep into these 26 funds and take a case where an investor picked only one fund and stayed invested for a period of 10 years. The luckiest investor would have made a return of 51% p.a. while the unluckiest investor would have lost 1.9% p.a. In 95% cases, that is, in around 135,600 out of 1 42,500 instances, a 10-year investor would have made more than 6% return which means they would have made more than that from FDs. In 99.4% of the cases, that is, in around 142,400 cases, a 10-year investor would have made positive returns indicating that they did not lose capital.

The above data clearly tells us that equity investing is not risky for a long-term investor. So, in order to achieve your investment goals, you must embrace equity and have a meaningful equity allocation in your portfolio. Furthermore, risks can be reduced by following some basic principles of diversifying and reviewing your portfolio at regular intervals.

Feroze Azeez is deputy CEO, Anand Rathi Wealth

Source link

Continue Reading

Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

 on

 

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

 on

 

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

 on

 

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version